I came across an article the excerpts of which are appended below.
I always save the finised video as "wmv". But the article mentioned "AVI" format.
Is it a better option?

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"....You will create the actual video file after you have finished editing the project. (Make sure to save the project one last time!) In iMovie 09, you’ll open the Share menu and select “Export Movie.” In Windows Movie Maker, you’ll open the File menu and select “Save Movie File” (in the Windows Vista version, select “Publish Movie”).

The best practice is to save the video file at the highest possible quality. Ignore all the options for “Web,” “YouTube,” “iPhone,” etc. — these will be lower quality video files. After you have exported the highest quality file, you can then convert it into any low-quality type you might need. The high-quality file can be uploaded “as is” to YouTube, Vimeo, etc. Exporting the high-quality file might take several minutes — even if your project is only about two minutes long....."

The final video file out of WMM will be in the AVI format. The final video file out of iMovie will be in the MOV format.

I would almost always recommend the .wmv format. WMM always publishes in .wmv format by default. The only exception is the choice of DV-AVI format. This is used specifically if you need to publish your video in DV-AVI format, say to get your video back onto a mini-DV camcorder (tape) which uses DV-AVI format. It's a very large file format (13.5 GB / hour of video) which is another reason it is rarely used.

I would instead use a very high-quality .wmv format as the output and send that to YouTube, elsewhere for upload. The DV-AVI format would be overkill for sending to YouTube since it will get transcoded to .flv or another format anyway.

CG, you said in your above answer "I would instead use a very high-quality .wmv format as the output " what does that mean, exactly? I just converted about 10.5 min of avi(2.12G) to wmv and the replay on WMP was smaller although clear. I am using Mini dv. I used Any Video Converter. I had that on my comp for when I convert my game cam vids to a smaller size. I am new to all this, so forgive my ignorance. Thanks Andy

For your source videos, there are two main input paths:
1) From a mini-DV camcorder, captured via Firewire. By default this comes in as DV-AVI format video (a standard definition format, barely compressed, about 13.5GB/hour). During capture of DV-AVI, Movie Maker looks for discontinuities in the timecode (e.g. turning the camcorder off/on) to find scene splits. I'd probably stick with DV-AVI format if inporting from mini-DV via Firewire.
2) From everything else. You might have downloaded files, game capture video, digital camera video files, etc. These can be in a myriad of file formats but I almost always convert them to .wmv format using Freemake Video Converter (I've heard some people have problems with Any Video Converter, but don't have firsthand knowledge of this).

For output, you have similar choices, but as I mentioned, unless you are putting DV-AVI video back onto a mini-DV camcorder, there aren't many advantages to saving in this format. What I was saying was that .wmv is the preferred format for saving. You have a lot of control over the size (pixel dimensions) and bitrate. You can get very good quality (even HD) with .wmv format. And since .wmv has more compression compared to DV-AVI, the same amount of video (with comparable quality) will result in smaller file sizes.

So basically, unless there are specific reasons you would need DV-AVI, use .wmv for input and output.

Remember DV-AVI is just one specific codec that could be in an .avi file, so don't equate DV-AVI with .avi. More often .avi files contain codecs like .mp4, DivX, XviD, etc. and most of them are hard for WMM to digest.

So far, my mini dv is the only video files I work with. What i did not realize was, that after you chose .wmv as your preferred choice to convert to, you could click the dropdown box next to "frame rate" and "video bitrate" and choose many options( which was not there until I actually put the cursor on it) and the drop arrow appeared, then what you said about different quality wmv made sense. I was just always using what was already chosen in those boxes never knowing I could change it! Live and learn! Thanks again. Andy

OK CG, a little update, I dl freemake, so now I have both freemake and any video conv. Then I converted my 2.12GB AVI into a .wmv@ 640X480 on both, freemake and AVC. Freemake did it in about 15min and came out to 150MB very clear and smooth on playback on WMP.
AVC did it in almost twice the time, came out to 64MB not as clear and I sensed a little more jitter. I cant tell you why. So I am removing AVC and will use Freemake. So thank you again! I am getting dangerous at this now! Andy